The only thing that the cadets in the article have going for them is the fact that their debts are unsecured. If they declare themselves bankrupt, their debt will be wiped out and at the absolute most, the bankruptcy period will end within one year. Their credit ratings will be screwed for another five years. However, it's still a good opportunity for them to dump a debt, that with interest would amount to £100,000ish. In a couple of years they will probably get good jobs (aviation or otherwise) and not have to pay any of the debt back. Expect CTC cadets to go bankrupt in mass when the penny drops.
As for CTC themselves, where did they go wrong? Once upon a time they had a nice little thing going, supplying a few cadets to the airlines. Then, they decided to expand their training operation and invest in expensive new assets and vastly increase the numbers of students coming through the system. It was always going to end in tears. Now, they have to recruit naive and foolish cadets just to pay for all those expensive DA42 trainers that they purchased. Where will it all end?